Learning to Thrive in a Risk-averse Culture

1. Learning to Thrive in a Risk-averse Culture Understanding the nature of risk, and the relationship it has with your organizational culture Chris Vandersluis chrisv@hmssoftware.ca President, HMS Software

2. HMS History 1984 HMS Software founded. First project: automating the project office at Philips Information Systems and creating a project timesheet 1985 HMS becomes a Welcom Software alliance partner 1994 HMS releases TimeControl 1.0 1995 HMS releases TimeControl 2.0 for Windows with links to Microsoft Project 1995 HMS joins Microsoft Project Solution Partner program 1997 HMS becomes a Primavera Technology Alliance Partner 1997 HMS releases TimeControl 3 as a client/server product 1999 HMS releases first web timesheet interface for TimeControl 2001 HMS releases TimeControl 4.0, a full web-based version 2004 HMS named as a Premier Microsoft Project Solution Provider 2005 HMS becomes a Microsoft Gold Certified Partner 2006 HMS named as a “First to Market partner” by Microsoft 2007 HMS releases TimeControl Industrial 4.7 2007 HMS releases TimeControl 5

3. Defining Project Risk • Classic Definition Risk management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events, while minimizing the probability and consequences of events adverse to project objectives • Real-world Interpretation Risk management is the prevention of being blind-sided early and often by events not under the full control of project managers. It includes the timely response by project sponsors and senior mangers to serious risk that can adversely impact project success and business objectives

4. Urban Legends About Risk • We can’t really manage the unknown, so why try?Reality: Only an estimated 10% of all risks are actually unforeseeable • We tried managing risk, but projects still failed. Reality: You were either tracking the wrong risks, or failed to get management action on the most serious risks • Management never responds to risk, so why bother? Reality: If projects aren’t linked to business objectives, management often will not see the value in taking action (compared to other priorities)

5. Balance Risk Management Project Manager “Death Wish” Can Management quickly grasp which risks are a real threat to project & business objectives? 0% Effort 100% Effort Unaware of or Ignore Risks Micro-Managing All Known Risks Achieving Balance: Be aware of all known risks, but be proactive in managing the most serious threats

6. Project Risks Cost, schedule, planning, resources, scope changes, dependencies, quality… Internal Risks * Sponsorship, resource conflicts, legal, financial, contract issues… External Risks * Economic downturn, competition, outsourcing, partner roles, regulatory… Technology Risks * Disruptive technologies, integration, vendor reliability, IT competency… Major Dimensions of Risk (*) Often not within the Project Manager’s control

7. Practical Risk Tools Three templates that can help improve consistency and early warning response to serious project risks: • Standard PM Life Cycle with Phase Gate Reviews • Standard Risk Management Process • Accelerated Project Recovery Template • PERT Analysis

8. Standardized PM Methodology Phase 1: Initiating Phase 2: Planning Phase 3: Execution Phase 4: Closeout Product Development Life Cycle Identify Needs Develop Project Plan Product Life Cycle Begin Closeout Business Case Time/Cost Estimates Reporting & Analysis Validate Deliverable Controlling User Accept ? Yes No No Manage “Product” Time/Cost Baselines Issue/Risk Response Verify Scope Proceed ? Yes Yes No Project Charter Assess Risks Change Control Lessons & Archive Improve & Measure Status OK? Yes Phase 2 Approval No No No Plan OK? User Satisfied ? Project Closeout Charter OK? Upgrade ? Yes Yes Yes Yes Cancel Cancel Phase 1 Approval Phase 2 Approval Phase 3 Approval Phase 4 Approval Go to ”Initiating”

9. Risk Insurance: A Project Recovery Plan

10. Visualizing Scope, Time and Cost • Scope: Work variance is greater than 20% of baseline work • Time: Finish variance is greater than 20% of current duration • Cost: Cost variance is greater than 20% of baseline cost

11. Visualizing Scope, Time and Cost Multiple baselines can also be tracked (see above), and the time-scaled data can be imported directly into Excel for analysis.

12. Greater Visibility to Your Project Risks Risk Probability and Severity: Quickly identify potential threats… even without using an automated Risk system Project Issues: Simple indicators can also be used to highlight serious, unresolved issues

13. Standard Risk Management Process This process can be triggered when a High Probability and High Severity risk is identified that could lead to potential project failure.

14. A Consistent PM Methodology This is just one example of how organizations can implement a standard PM Methodology that can be applied across all projects. The ultimate goal is repeatable project success, and improving overall PM Maturity.

15. PERT Analysis sheet

16. Multi-Bar PERT Gantt

17. Summary • The primary goal of managing risk is to keep from being blind-sided by unexpected events… and to enable better decision-making with timely, accurate data • Virtually all project risks can be identified, but the list, priorities and actions should be updated regularly • For key decision-makers, less is usually more… as long as it’s kept action-oriented • If risks are overlooked, then shame on the project manager… if management refuses to act on well-defined, prioritized risks, then shame on management!

18. Some of our clients

19. Take a free online tour of Project 2007 on us: http://www.epmconnect.com/PB_Registration.asp?PartnerID=1318&LDT=Tour To find out more about HMS Software: www.hmssoftware.ca For more information from HMS: info@hmssoftware.ca Take action!

20. Thank You!